Thursday, September 29, 2011

The Twist!!

The twist just means the Fed will increase the average maturity of its Treasury portfolio—buying $400 billion of long-term Treasurys (over six years) and selling $400 billion of short term—and also reinvesting mortgage-backed securities (MBS) proceeds back into other MBS instead of Treasurys. Bernanke says this helps the economy and maintains low mortgage rates.
Nonsense! This takes money out of one pocket, pours it into another and ends up—plain and simple—flattening the yield curve, which is bad for the economy, not good. The slope of the yield curve, singularly, is a long-time, powerful leading economic indicator—the steeper the more positive. The flatter the worse. We want steeper, not flatter. What Bernanke has done is backwards and wrongheaded.
The Fed itself has long used the steepness of the yield curve as an internal leading economic indicator—it has a whole model based around it—so it’s puzzling it would now take this approach. Bernanke has said he thinks Milton Friedman would approve of what he’s doing. Again, nonsense! Friedman was endlessly clear that central banks drive monetary policy like the Three Stooges would drive bumper cars—and act even more like Moe, Larry and Curley. Friedman would have argued to do less and grow the monetary base at a steady rate that is the sum of what you want the long-term inflation rate to be and what you think the long-term growth of the economy will be—and then, like the bumper car, take your hands off the wheel and let capitalism and markets do the rest.
Admittedly, what Bernanke’s done isn’t much and not terrible since he can’t push long rates down much from here to flatten the curve much. But it’s a negative, and we don’t need more negatives now. Maybe Bernanke thinks he’s a warlock—he surely appears to be revving up his Charlie Sheen “winning” ways. Before long, he may adopt his own goddesses.
The “twist” isn’t even new! It was tried 50 years ago to no avail. But in central banking, if you do something new that has no impact, you win a Nobel Prize, as then-Fed Head James Tobin did.


Ten Things Only Bad Managers Say.

We know the kinds of things good managers say: They say “Attaboy” or “Attagirl,” “Let me know if you run into any roadblocks, and I’ll try to get rid of them for you,” and “You’ve been killing yourself—why don’t you take off at noon on Friday?”
Bad managers don’t say these things. Helpful, encouraging, and trust-based words and phrases don’t occur to them.
Crappy bosses say completely different things. For your enjoyment, we’ve gathered together 10 of the most heinous, bad-manager warhorse sayings. Do any of them sound like something a manager in your company might say (or might have said this week)?
If you don’t want this job, I’ll find someone who does.
Great leaders understand that the transaction defining the employer-employee relationship—the fact that an employer pays you in cash while you cough up your value in sweat and brainwork—is the least important part of your professional relationship. Good managers realize that to get and keep great people, they have to move past the dollars-and-cents transaction and let people own their jobs. Good leaders give people latitude and let them know that their contributions have value. Lousy managers, on the other hand, love to remind employees that it’s all about the transaction: “You work for me.” They never fail to remind team members that someone else would take the job if you ever got sick of it or let the lousy manager down in some way.
I don’t pay you to think.
This is what a bad manager says when an employee offers an idea he doesn’t like. Maybe the idea threatens the inept manager’s power. Maybe it would require the lousy manager to expend a few brain cells or some political capital within the organization. Either way, “I don’t pay you to think” is the mantra of people who have no business managing teams. It screams, “Do what I tell you to do, and nothing else.” Life is way too short to spend another minute working for someone who could speak these words.
I won’t have you on eBay/ESPN/Facebook/etc. while you’re on the clock.
Decent managers have figured out that there is no clock, not for white-collar knowledge workers, anyway. Knowledge workers live, sleep, and eat their jobs. Their e-mail inboxes fill up just as fast after 5:00 p.m. as they do before. Their work is never done, and it’s never going to be done. That’s O.K. Employees get together in the office during the daytime hours to do a lot of the work together, and then they go home and try to live their lives in the small spaces of time remaining. If they need a mental break during the day, they can go on or without fear of managerial reprisal. We are not robots. We need to stop and shake off the corporate cobwebs every now and then. If a person is sitting in the corner staring up at the ceiling, you could be watching him daydream—or watching him come up with your next million-dollar product idea. (Or doing both things at once.)
I’ll take it under advisement.
There are certain words that we never use in real life—only in business and only in ways that let us know that the speaker is shining us on, bigtime. “I’ll take it under advisement” means “Go away and die, and don’t speak to me again unless I ask you to.” It means “I am not going to do whatever you just suggested that I do, and I want you to know that I value your opinions less than I can tell you.”
Who gave you permission to do that?
My brother worked at a huge tech company, and one day he and his team of Software Quality Assurance folks were meeting at the office before heading to the airport. They gathered at 6 a.m. in a conference room to talk about their plan once they hit the ground in the destination city. The door opened and a manager walked into the conference room. “Who called this meeting?” he asked. “Only a grade level E5 can call a meeting.” My brother left that job a few months later. People who obsess about hierarchy and permission and grade levels and the like are people you’d be better off avoiding, especially in relationships that give them power over your life and career.
Drop everything and DO THIS NOW!
Any manager can have a last-minute emergency that pushes everything else out of the way. Good managers pull this move sparingly and only in real crises. Poor managers do it every day, and they never remember the dozen equally critical (at one point in time) priorities they’ve already told you to drop everything else for. A good comeback if your manager has this habit is to answer, “Yes, of course. That’ll push [yesterday’s drop-everything project] to next Thursday—is that fine?”
Don’t bring me problems. Bring me solutions.
This chestnut showed up during the era when people were beginning to think about business process and realizing that employees could often solve their day-to-day problems in the moment and on the ground, rather than having to go upstairs to get help. That’s O.K., but too many managers have reinterpreted “Bring me solutions, not problems” as “Don’t complain—shut up and deal with it.” The fact is, business processes and organizations are complicated today, and often the employee who spots a problem doesn’t have the information she or he needs to solve it. That’s where a manager can help, if he or she is oriented that way. Managers who say, “Bring me solutions” are often really saying, “Stop telling me what I don’t want to hear.” Working for a person like that will shorten your lifespan.
Sounds like a personal problem to me.
One of the worst situations I ever encountered as a corporate HR leader involved an employee who went off the rails on a business trip for a Las Vegas customer event. I heard through the grapevine that two employees assigned to share a hotel room had exchanged heated words. On investigating, I learned that the hot mess of an employee had gotten drunk in Las Vegas and showed up (still drunk) in her hotel room with her (also drunk) cabdriver/instant boyfriend in tow. I was horrified on a million levels and virtually ran to her manager’s office to talk once the trip was concluded. “How are we going to deal with this?” I asked him. “Oh, it’s O.K.,” he said, “I told the two young ladies to sort it out between then.” “But—but,” I sputtered, “our employee got drunk and disorderly, was nearly arrested in the hotel, brought a drunk stranger into her shared hotel room, and wouldn’t leave when her co-worker protested. The poor marketing gal had to call another co-worker and switch rooms at four in the morning!” “I know,” said her manager, “and I think there’s a lesson there in how to work harmoniously on a team. I’ve asked the two women to have lunch and talk about it.” That didn’t happen, because we fired Ms. Unruly the same day. If your manager can’t see misbehavior and snuff it out, you have a problem.
I have some feedback for you … and everyone here feels the same way.
Good managers give their employees feedback when it’s warranted, and they try to emphasize and reinforce the good things. Bad managers don’t give praise, but they ladle on the criticism, and the really bad ones add an extra twist of meanness: They say, “Everyone here feels the same way.” Pretty soon, you start to feel that you can’t trust anyone in your shop and that everyone hates you—until a co-worker mentions that your lousy manager said the same thing to her. Poor managers need to throw in a few dozen extra “votes” with their barbs, just to keep employees off guard. A true leader would talk about conflict or performance issues regularly in staff meetings, resolving whatever is at issue without passing along anonymous jabs.
In these times, you’re lucky to have a job at all. 
The funniest thing about a manager who would open his mouth and say, “You’re lucky to have a job at all” is that these managers never seem to think they’re lucky to be working—just everyone else. “You’re lucky to have a job at all” in an era of more than 9 percent unemployment is the same as saying, “I can’t believe you manage to stay in that 90 percent of the population that is working.” It’s a huge insult, but worse, a statement of personal failure on the manager’s part. People who live in fear don’t tend to see the potential in themselves, or in others. If your manager’s native mode is critical, and if she tosses around compliments like manhole covers, know that there are plenty of other employers who’d be happy to have someone like you in the mix.


Saturday, September 17, 2011

Lanco Financials may be strained till 2013.

Rising interest rates and a long work-in-progress pipeline are likely to strain Lanco Infratech’s performance.
Analysts see the pressure on the infrastructure company’s balance sheet to persist at least till fiscal 2013.
The indications were already visible in the performance for April-June quarter with the net profit declining by 9% to Rs235 crore.
The company officials had attributed this to a drop in the realisations in the power segment. Lanco has also committed a capital expenditure of about Rs8,000 crore, including a debt component of about Rs6,000 crore.
“With high leverage, a visible equity funding gap and its earnings disappointments, we see limited investor appetite for the stock. We view the company’s RoE (return on equity) as anaemic (despite high gearing), making a weak investment case,” Shilpa Krishnan, Sumit Kishore and Deepika Belani, analysts with JP Morgan, said in their report on August 24.
In fact, market analysts see the pressure on the company remaining quarters of this fiscal, while a revival in the situation is expected only in fiscal 2013 primarily on account of the power segment.
“A strong improvement in fiscal 2013 net profit is predicated upon the power segment, where we expect a revival of the Udupi project, commissioning of Anpara, and better profitability of Amarkantak-II, as the unremunerative PPA is renegotiated by fiscal 2012-end. In the interim, we believe there is upward risk to the rate cycle, which could exert pressure on Lanco’s parent debt and cause project cost overruns. Further investments in projects could impair cash flow. The pursuit of growth beyond pre-existing plans could add to its precarious leverage,” the JP Morgan analysts said.
The weaker construction profits, lower plant load factors in the power projects and lower merchant prices of the power generated are being seen as key contributors to the pressure on the balance sheet.
Though it is still early days, analysts from various brokerages estimate the full year performance for fiscal 2012 to remain significantly away from the numbers reported for fiscals 2010 and 2011.
The estimates available so far indicate to a topline of `8,200 crore for fiscal 2012. However, the net profit is expected to drop significantly. While the return on capital employed for the full year is expected to at about 6.4%, the RoE is projected to be at about 3.4%.
The power segment is expected to hold the key for the company with average megawatts under operation at about 2,400 in fiscal 2012.
While the regulated capacity is estimated to be at about 670 mw, the PPA capacity is pegged at about 747 mw while the merchant capacity is estimated to be at about 987 
However, the analysts project a drop in merchant power revenues from Rs2,128 crore in the last fiscal to about Rs1,684 crore by the end of March 2012.


Selan can touch Rs 500

We like Selan Exploration Technology because it has got the rights to develop oil fields in the state of Gujarat and we think that there is going to be a very strong volume-led growth over the next 2-3 years from current production of about 2-2.25 lakh barrels, the management expects this to go upto about 5-7 lakh barrels over the next 2-3 years."
He further added, "We have also seen a strong realization improvement in the last two quarterly numbers. When you look at the valuations on most of the parameters whether on a price to earnings or on an EV to EBITDA or even on the basis of the probable reserves that the company has, the stock is quoting at a substantial discount to companies like ONGC or Cairn. Though it is a smaller capacity, the valuation gap is extremely high and the company has a very high operating profit margin. So we think that this stock can give an upside upto Rs 500 over the next 1 year."

In Q1FY2012, the net revenues (adjusted for the petroleum profit) of Selan Exploration Technology (Selan) grew by 42% backed by a stupendous growth (of 46%) in the realisation in line with the crude price movement. However, the volume remained flat year on year (YoY) at 47,217 barrels. Sequentially, the sales grew by 24%, which is a reflection of the growth in both volume (up 10%) and realisation (up 13%). The operating profit margin (OPM) was reported at 73.6%, an expansion of 118 basis points YoY, supported by high realisation. The operating profit grew by 44% YoY to Rs18 crore. Sequentially, the operating profit grew at a significant rate of 64% as expenses declined by 27% while sales grew at 23% quarter on quarter (QoQ). The administrative and employee expenses declined largely over Q4FY2011. This could be attributed to the adjustment done at the last quarter of the last year.”
“The management has indicated that it has commercialised two wells from the drilling activity undertaken at the Lohar oilfield. The company aims to drill 18-20 new wells in the next two years, subject to regulatory approval. In terms of its medium-term guidance the management expects to more than double the production to 500,000 to 700,000 barrels over the next two years and has roped in a highly experienced team to manage the operations under the leadership of Andrew Wenk as the president and chief executive officer of the company. He has two decades of experience in the oil exploration industry with stints in companies like Cairn India (Rajasthan block) and Reliance Industries (the Krishna- Godavari basin). Consequently, we have revised our production volume estimates for FY2013 (4.48 lakh barrels, assuming 12 wells get commercialised from the current drilling plan) and accordingly our EPS estimate for FY2013 stands at Rs41.9 (up from Rs38.4 earlier). The FY2012 estimates get revised upwards due to the higher than expected realisation, which is currently Rs28.3, against previous estimate of Rs23.4.”
“Given the company’s aggressive drilling programme, we expect Selan’s net revenues and earnings to grow at a compounded annual growth rate (CAGR) of 47% and 49% respectively over FY2011-13, driven largely by volume growth with an assumption of flattish realisations. At the current market price the stock is available at 4.5x FY2012E and 2.7x FY2013E of EV/ EBITDA multiple. We maintain our Buy recommendation on Selan with a price target of Rs500 (based on EV/ EBITDA FY2013E multiple of 5.5x),” says Sharekhan research report.


Tech Mahindra and Mahindra Satyam Merger

The merger entity of Tech Mahindra and Mahindra Satyam may emerge as a formidable competitive force in the Asia-Pacific region, especially for Indian IT service providers and other regional players, according to International Data Corporation (IDC).
IDC, a premier global provider of market intelligence and advisory services, further said the joint go-to-market initiatives between Tech Mahindra and Mahindra Satyam as the foundation for future integration proved to be a success model that clinched 10 new clients for Mahindra Satyam last year.
"A combined revenue base in excess of USD 2 billion with approximately 20 per cent coming from emerging markets (Asia-Pacific, Africa and the Middle East) will give the merged entity a strong growth story," the report said.
The IDC Insight is based on presentations and discussions at a Mahindra Satyam analyst meet held on July 8.
"In addition, the merged entity will have a well-balanced split in revenue from the United States and European markets where its immediate competitors (ie Indian IT players) have found it difficult to maintain the balance," IDC said in its latest report.
Commenting on margins, the report said in order to maintain margin levels, it will be essential to leverage Mahindra Satyam's intellectual property and product delivery model.
Potentially, the next stage of consolidation after the Mahindra Satyam and Tech Mahindra merger would be to bring Mahindra's business process outsourcing (BPO) services into the fold to build up the scale of its operations in domestic and global markets.
The joint initiative resulted in 10 new wins for Mahindra Satyam over the past year, including a transformation services deal for a telecom operator in Australia, transportation management solution for a major telecom operator in the United States, customer analytics for a major Canadian telecom operator and a cost reduction as well as compliance solution based on Oracle for GE-Energy.
"Going forward, the two companies have identified 20 telecom accounts for further focus across operational and billing support systems (O/B SS), decision support systems (DSS) and extended EBS," the IDC report said.
"In the EBS space, focus areas will include business analytics, point of sale (POS) solutions for telecom retail stores and property management for telecom operators," it added.
IDC also opined that in order to make the joint initiatives taken up by Tech Mahindra and Mahindra Satyam -- which it dubbed the 'M-Cube Advantage' -- work, it will be crucial to take the ongoing integration of Mahindra Satyam and Tech Mahindra to its logical conclusion.
At the customer panel in the analysts meet, representatives from leading corporates spoke highly of their experience with Mahindra Satyam and their commitment to continue further their relationship, IDC said in its report.


Bank NPA still below 2%